Court of Appeal deals hammer blow to Beverly Hills Polo Club

The first instance proceedings were quite complex and resulted in a significant 77 page judgment; for background and our analysis of that decision, please see here:  Polo Club marks "reined" in: Lifestyle Equities v Royal County of Berkshire Polo Club | Fieldfisher.

Lifestyle Equities, which has brought several trade mark actions in recent years, appealed against the High Court judge's dismissal of its infringement claim.  The appeal was rather stripped down in comparison to the first instance action, consisting of two grounds of appeal:

• The judge had wrongly relied on matters beyond the trade marks and the signs in assessing infringement in two respects:  a) he was wrong to rely on the existence of other polo-themed brands (the 'crowded market' point); and b) he was wrong to rely on coexistence agreements with third parties; and
• The judge had wrongly dismissed a likelihood of post-sale confusion, which would be relevant if the first ground succeeded but was not enough to lead to a finding of likelihood of confusion at the point of sale.

Both grounds were dismissed.

Lord Justice Arnold, giving judgment for the Court of Appeal, set out a reminder of the standard of review on appeal:  "Since the judge's conclusion that there was no likelihood of confusion involved a multi-factorial evaluation, this Court can only intervene if he erred in law or in principle".  He had not.

First ground of appeal

Lifestyle Equities argued that the "crowded market" should not have been taken into account in assessing likelihood of confusion.  It would only have been relevant if it affected the distinctive character of the mark or if it formed part of the context of use of the sign, which it did not.  The Court of Appeal disagreed.

              Crowded market impacting distinctive character of the trade mark

It is clear from case law that "the more distinctive the earlier mark, the greater will be the likelihood of confusion".  It is therefore the case that "trade marks with a less distinctive character enjoy narrower protection than marks with a highly distinctive character".

The court must look at the public's perception of the mark when the allegedly infringing use of the sign began; if it did not then any diminution of the trade mark caused by the defendant's unlawful use of the sign would work to the defendant's advantage.  Here, even if one ignored the defendant's use, the fact that there were numerous similar marks on the market made the mark less distinctive; the common elements to the marks had low distinctiveness because of the crowded market.  Although the defendant's use of the mark should be ignored for this purpose, there was no reason to ignore the use of third parties; indeed, "third party use of similar signs does tend to diminish the distinctiveness of a trade mark.  In a crowded market it is harder for one mark to stand out".  The judge had been correct to consider that the crowded market diminished the distinctive character of the trade mark.

During the appeal, Lifestyle Equities had argued that some (but not all) of the third party uses were infringing uses.  It had not argued this at trial, and there was no evidence that it had sued any relevant parties; this argument was not open to it. 

              Crowded market impacting context of allegedly infringing use

Use of the infringing sign must be considered in context.  Arnold LJ felt that the application of that concept could be tricky in practice, as it is not clear how wide a context one should consider.  He considered several cases which had dealt with the issue, and then decided that the issue of how far context extends "is best decided in a case where it actually matters.  It does not matter in this case, because the crowded market is relevant to the distinctive character of the Trade Marks regardless of how narrowly or broadly the context of the allegedly infringing use is drawn".

              Significant proportion of the relevant public

Lifestyle Equities made a rather convoluted argument that the judge had got the law on "significant proportion of the relevant public" wrong:  as the judge had not found that no significant proportion of the relevant public were unaware of the third party uses, there must have been a significant proportion of the public to whom the marks were more distinctive than the judge had found, and they were more likely to be confused by use of the signs.

This was given short shrift.  It had not been argued at trial that there were different relevant publics with different perceptions, there was no evidence to suggest that that was the case, and there was no burden on the defendants to prove the opposite. 

              Coexistence agreements

The judge had rejected Lifestyle Equities's argument that the coexistence agreements which were raised and evidenced at trial should have been disregarded as irrelevant.  Lifestyle Equities had argued that the EU General Court case of Omega v OHIM had established a principle that all coexistence agreements are irrelevant to the assessment of the likelihood of confusion, but that was not the case.  It is right that a coexistence agreement "between A and B cannot determine whether the public is likely to be confused or not", but it does not follow that coexistence agreements are irrelevant to assessing likelihood of confusion.  Such agreements can form part of the background to the global appreciation which the court must undertake when assessing likelihood of confusion, "[p]rovided that caution is exercised before drawing any conclusion" from them.  In this case the judge had been clear that the coexistence agreements had been useful and had given a practical insight into the market, but that he needed separately to carry out the global assessment and in doing so, he made no reference to the coexistence agreements.  This was the correct approach.

Second ground of appeal

This was conditional upon the first ground and therefore did not arise.  However Arnold LJ made the point that, as the signs were not similar to the trade marks, "I cannot see how there could be a likelihood of post-sale confusion in this case if there was no likelihood of confusion at the point of sale".

Comments

This is a very sensible, clearly reasoned and concise judgment which the Royal County of Berkshire Polo Club will be hoping marks the end of a very long dispute between the parties in the trade mark offices and the courts.   Lifestyle Equities may request leave to appeal to the Supreme Court but it is very hard to see any grounds on which such a request would be granted.